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Ohio State Tax Blog
The Ohio Senate passed House Bill (“H.B.”) 5, which would streamline Ohio’s municipal income tax system. H.B. 5 is greatly needed due to the over 600 different municipalities with varying tax rules, tax rates, and over 300 different tax forms. The House is now set to vote on the final version of the bill.
Specifically, H.B. 5 would provide for the following:
However, H.B. 5 would not require centralized collection of municipal income taxes.
Opponents of H.B. 5 argue that it will ultimately cost local governments about $82 million per year and lead to less local control and potential reductions in tax collections. Specifically, opponents point to the provision that calls for municipalities to allow a 5-year net operating loss carry forward period, which would be delayed pending the recommendation by a study committee to be created to review such a rule. Yet, these opponents ignore the inefficiencies of a municipal income tax system with hundreds of different taxing jurisdictions which causes both municipalities and Ohio taxpayers to incur significant costs to comply therewith.
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